Energy prices are soaring, amid throttled gas flows and increased scarcity in the market pointing towards supply shortages this coming heating season. Without sufficient demand reduction, gas stocks could get emptied up should Russia completely halt supply, shows the Power Barometer 2022, Eurelectric’s data crunch on trends in the electricity industry.
“When Russia tightened its grip on gas, the once-quiet consumable became a loud inflationary force,” read the report adding that with gas being the predominant price setter in the electricity market, it caused average day-ahead electricity prices to grow by 532 per cent between January 2021 and August 2022.
Record wholesale electricity prices exert pressure on the retail market. Vulnerable customers especially feel the pinch as contracts concluded in EU capitals in 2022 are 84 per cent more expensive than in 2021, said Eurelectric.
“The root cause of the problem is a shortage of gas supply and our addiction to imported fossil fuels,” said Kristian Ruby, Secretary General of Eurelectric.
“Governments should seek to tackle this rather than resorting to distortive, ad-hoc interventions in the electricity market. In parallel, we also encourage sobriety measures to save energy this coming winter,” he underlined.
However, there are also some positive trends in major oil and gas-consuming sectors. In 2021 the electric powertrain represented 18 per cent of new vehicle sales and heat pump sales grew by 25 per cent to reach 2 million units, the Power Barometer showed. Accelerating the electrification of transport, responsible for 63 per cent of imported oil, as well as that of buildings and industries, representing 57 per cent of gas demand, is critical to reducing fossil fuel imports.
Eurelectric warned that to keep up with power demand, annual investments in generation, as well as distribution grids, need to rise above 135 billion euros, a significant increase compared to today. Regardless, reducing energy demand in households as well as industry will be indispensable to address soaring prices as well as energy shortages.
“This crisis shows us the true value of energy. Europe must brace itself for a tough winter and we should all prepare to do our bit to meet the challenge,” concluded the Secretary General of Eurelectric.